My tour guide at the Panama Canal last weekend pointed to the long line of proud red, white, and blue Panamanian flags. Every light pole had one. Normally, when a U.S. Secretary of State was in Panama City on an official visit, which Marco Rubio was, the Stars and Stripes would alternate with Panama’s flag. This time, the flags were all Panama’s. It was a message, our guide said, to tell Rubio that the canal is also Panama’s.
It’s true that Americans built it. President Roosevelt — Teddy, not Franklin — had the Panama Canal built more than a century ago. President Carter agreed 48 years ago to turn it over to Panama, the Senate ratified the treaty, and President Clinton turned it over 25 years ago. The canal does belong to Panama. That is a fact, and is not arguable.
It’s not only that our government, which built it, gave it to them. In the past quarter-century, Panama has invested billions of dollars building modern locks at either end — locks that work the same way as the Ballard Locks in Seattle — so that the canal can handle bigger ships than existed when the Americans opened the canal in 1914. These new locks, paid for by Panama, are the most valuable sets of locks in the world. And three-quarters of the cargo going through the canal is either from or to the United States.
If the people of Panama thought that Trump’s threat to “take back” the canal was imminent and real, there would have been blood in the streets when I was there recently. Back in 1964, when Panamanian students rioted when American high school boys in the Canal Zone refused to fly Panama’s flag next to the Stars and Stripes, there WAS blood in the streets. U.S. troops fired on the Panamanians, and 22 of them died. The long negotiations to give the canal to Panama began because of that day. Every year, Panama venerates the rioters who died with a public holiday, January 9, called Martyr’s Day.
Last weekend, I almost had a bucket of water thrown on me — but it was because last weekend was Carnival, Panama’s version of Mardi Gras. Walk in certain quarters, you risk getting soaked. In my case, the man with the bucket was restrained by his girlfriend, and I escaped. But as far as protesting Americans went, the only evidence I saw was a man wearing a baseball hat that declared the canal to be Panama’s “FOREVER.” He was sitting on a curb trying to sell cigars to tourists.
In his speech to Congress, Trump argued that taking back the canal would “enhance our national security.” He has argued that the ownership of container terminals near both ends of the Panama Canal by a Hong Kong company, Hutchison Ports Holdings, puts the Chinese government in a position to shut down the canal. But Hutchison Port Holdings is controlled by Li Ka-shing, a thoroughly capitalist tycoon, and not by the Communists in Beijing.
Hutchison’s terminals are not part of the canal, nor are they the only terminals at the canal’s endpoints. Panama has other terminals including one owned by a Seattle company. On the Atlantic end of the canal, at Colón, Seattle’s SSA Marine owns the 129-acre Manzanillo International Terminal, which has 19 huge container cranes that can load and unload ships too big to go through the canal’s locks. But that doesn’t mean that executives in Seattle are in a position to shut down the Americas’ most valuable canal.
In any case, the Hutchison Ports Holdings’ parent company, CK Hutchison, has now agreed to sell its Panama terminals, plus terminals in 23 other countries, to U.S. and Swiss investors led by BlackRock Inc., keeping only its port interests in home territory under China’s flag.
The sale of the Panama ports has everything to do with politics. What it has to do with security is not so obvious. The United States military guarantees the security of the canal. In a war, the Chinese government could shut down the canal with a couple of well-targeted missiles, as could a number of other governments. Short of that, the canal appears to be secure. By treaty, it gives priority to ships of the U.S. military, but other than that, it treats the ships of all countries the same. They all line up, and I was told they all pay tolls under the same schedules.
A while back the Panama Canal did have the threat of a new competitor. In 2013, Nicaragua granted a 50-year concession to the HK Nicaragua Canal Developmnent Investment Group, which was backed by several mainland Chinese companies and headed by headed by Wang Jing, a mainland Chinese man. His plan was to build a canal wider than Panama’s, connecting the Atlantic and Pacific through Lake Nicaragua. Work was supposed to start in 2014 and end in 2020, but such a canal would be hugely expensive. The company failed to raise the money and closed up shop in 2018.
When I was in Panama, it was explained to me that the Nicaraguan canal was China’s way to put pressure on Panama to drop its recognition of Taiwan — which Panama did, in 2017. The Nicaraguan project subsequently died. Whether China-Taiwan politics are behind that decision, I don’t know.
